Last night, Cornerstone attended the “OM5G – Will 5G make or break your business?” launch event organised by Addleshaw Goddard in London. Belinda Fawcett was invited to participate in the panel discussion and share her thoughts on what we need to do to make 5G work.
The panel was chaired by Dan Thomas – Chief UK Corporate Correspondent at The Financial Times and panelists included:
Belinda Fawcett – General Counsel and Director of Property & Estates at Cornerstone
Ellie Jukes – Senior Investment Manager at Legal and General Capital Future Cities Team
Ted Orf – Co-Founder and Investor at Revolt Ventures
Greg McCall – Managing Director, Converged Services Platform at BT
Matthew Howett – Founder and Principal Analyst at Assembly
The event covered:
How 5G will supercharge the UK economy
The new industries that 5G will create and transformations of existing ones
How businesses can effectively harness 5G
Belinda discussed the need for all parties to collaborate and embrace the Code to enable and fast track the rollout of the 5G technology that will have such a significant impact on the UK’s digital economy.
At the event, Addleshaw Goddard shared their 5G report that gives insights from industry experts, revealing how they expect 5G to impact residential, offices, cities, retail and logistics.
On 12th November, we attended the RICS Telecoms Conference in London, where our Head of Strategic Legal Projects & The Code Programme, Carlos Pierce, took part in the panel discussion on “2 years on: Understanding how The Code is working in practice.” This was a discussion looking at The Electronic Communications Code (ECC) and whether its objectives are being met for various parties involved. It debated whether the Code is delivering for landowners, operators and infrastructure providers?
The panel participants included: Carlos Pierce, Head of Strategic Legal Projects & The Code Programme, Cornerstone Dr Charles Trotman, Senior Economist, CLA Juliette Wallace, Business Planning and Property Director, MBNL Michael Watson, Partner and Head of Property Litigation, Shulmans
As the panel discussion kicked off by the chair, Guy Fetherstonhaugh QC from Falcon Chambers, it came to light from the debate that although progress has been made since the introduction of the ECC in 2017, there are still challenges in the industry that we need to continue to work on. Some of these challenges related to a misconception of Cornerstone wanting to take site owners to Tribunal cases without engaging first. However, engaging with Landlords and Site agents has been at the forefront of Cornerstone’s plans, but where there is no interaction from the opposite party to discuss the Code further, the Tribunals have been a source for guidance.
The main concern from the Site Provider Agents seemed to be the impact that the Code has on rental levels. But it was highlighted that although the new updated Code imposes a different approach to valuation, this is all because we need to support the Government’s drive to build a better digital Britain and it’s necessary to encourage greater investment in digital connectivity by the Operators. The Site Provider Agents must recognise that this is what the updated Code will deliver and it’s important to work with the industry to achieve this.
Perhaps this stems from a lack of understanding of the Code? Discussing the recent tribunals, it became evident that they have given the industry some clarity, but there is still a gap whereby the Code is not fully recognised for what it is and how it can be used to help all parties. If there is capacity for more cases to be taken to Tribunal, then perhaps that is the way forward until we all comprehend how the Code works and how it will support us improve mobile connectivity.
Consensual Code deals have been done; therefore, it does work, but the discussion looked at what more can we do to make this a permanent solution going forward? Carlos Pierce says “All parties need to communicate and agree on a way of working. We at Cornerstone are always willing to have this conversation but we need the Landlord community to be on the same page. We do believe that in the next six-nine months, we will see more consensual deals as businesses and communities want to take advantage of having reliable mobile coverage as it plays a big part in our everyday lives. However, it’s in all our interests to make the journey as smooth as possible and without having to rely on tribunal precedents.”
The panel discussion did raise an interesting debate and clearly, all relevant parties need to take a bold step in supporting the Code and play their part in making it work. It must be recognised that if we don’t embrace what it was intended for, this can have an impact on the quality of our mobile services and the demand for 5G in the UK. This cannot be allowed to happen.
O2 and Vodafone switch on their 5G networks with supporting data tariffs and plans
Congratulations to Telefónica (O2) on the launch of its 5G service which follows the Vodafone launch in the summer.
The roll-out of 5G is an exciting time for Cornerstone and its customers as we take another significant step forward in improving and transforming digital connectivity in the UK. We take great pride in being part of the launch of this new mobile generation. As the UK’s leading mobile infrastructure services company, Cornerstone, who were integral in delivering both these launches are loving the challenge of supporting the leading mobile operators for future generations.
To read the full statements from Telefónica UK Limited (“O2”) and Vodafone Limited (“Vodafone”) and visit the links below.
Court of Appeal Decision – Electronic Communications Code
Right to carry out Surveys is a Code Right and the Interim Rights Procedure under Paragraph 26 can be used independently.
Carlos Pierce and Tina Middleton look at the recent Court of Appeal decision in The University of London v Cornerstone Telecommunications Infrastructure Limited [2019] EWCA Civ 2075.
Upper Tribunal dismisses a paragraph 20 Application by Cornerstone for a Code Agreement
Carlos Pierce and Tina Middleton look at the recent decision in Cornerstone Telecommunications Infrastructure Limited v Compton Beauchamp Estates Limited [2019] UKUT 0107 (LC) under the Electronic Communications Code (“the Code”).
What was the case about?
Cornerstone (a joint venture company owned equally by Vodafone and Telefónica (O2)) sought a Code agreement from the freeholder of land at Galleyherns Farm in Longcot Oxon (“the Site”) which is owned by Compton Beauchamp Estates Limited (“CBE”). Vodafone is currently transmitting from the Site, although its 1954 Act excluded lease had expired.
CBE argued that it wasn’t the occupier for the purposes of paragraph 20 of the Code and that Cornerstone should seek the Code agreement from the occupier, i.e. Vodafone.
There was a discussion over the exact status of Vodafone’s occupation. In possession proceedings, CBE asserted that Vodafone was occupying pursuant to the Telecommunications Act 1984 (as amended by the Communications Act 2003) (“the Old Code”) whilst Vodafone argued for a periodic tenancy. In the Code proceedings, each party reversed its position.
The Tribunal decided that Vodafone was occupying the Site pursuant to the Old Code.
Decision
The judge dismissed the case because it said that Cornerstone should have sought the Code Agreement from the occupier, Vodafone, rather than the freeholder.
Key issues considered by the Tribunal
The Tribunal had to consider four key issues:
Headline
Issue
Jurisdiction
Can Cornerstone seek the Code agreement against the freeholder (CBE) or should it seek it against the occupier, Vodafone
Public Benefit
Does Cornerstone pass the public benefit test in paragraph 21 of the Code where there is existing apparatus in situ?
Terms
The Terms that the Tribunal might impose
Valuation
The value of the Code agreement
Jurisdiction
The judge agreed with CBE that the “relevant person” who can confer the Code Rights for the purposes of paragraph 20 of the Code is the ‘occupier’ as that term is defined in paragraph 105 of the Code. He said Vodafone was the ‘occupier’ for the purposes of paragraph 20 of the Code. The judge dismissed the application on a technicality and therefore didn’t discuss the terms.
Whilst deciding in favour of CBE, the judge made the following observations:
“[Cornerstone] could have reached agreement with Vodafone for it, as occupier, to confer the rights on [Cornerstone], and could then have asked the Tribunal to impose an agreement providing for those rights to bind [CBE] but it did not do so.” (paragraph 89).
The judge also explained how an operator might overcome such an obstacle including:
“..the Tribunal…[imposing] an agreement which was contingent on Vodafone voluntarily giving up its right…” (paragraph 94).
This could give a welcome direction, and a practical solution, for an operator in a similar position. An operator could seek a Code agreement directly from the operator in occupation on its preferred Code terms and ask the freeholder to be “bound” by that agreement.
Public Benefit
The judge said that Cornerstone would have met the public benefit test in paragraph 21 of the Code in this case and said that “…the public benefit resulting from the making of an order for a new agreement would outweigh the prejudice to the respondent.” (paragraph 103).
Valuation
As the case was dismissed, the Tribunal made no decision, or binding direction, on valuation. However, its observations are of particular interest as to how it might have arrived at a decision.
Compensation
CBE only made one claim for compensation, that being the loss of rent from the existing Vodafone lease should a Code agreement be imposed by the Tribunal. This claim was dismissed by the Judge.[1]
Consideration
As regards consideration, the judge considered the different approaches taken by the opposing expert valuers but did not arrive at a conclusion on the appropriate consideration in this case.
CBE’s Approach
The judge dismissed:
the approach taken by CBE’s valuer[2] to arbitrarily discount Old Code agreements by 35%; and
his approach of discounting new Code agreements.
However, whilst the Old Code agreement approach seems to have now been put to bed, the judge tantalisingly suggested that true Code agreements might be useful in future cases[3]. Clearly, though, those agreements would need to relate to sites with similar characteristics in close proximity and be agreed on the statutory assumptions to be true comparables.
Cornerstone’s Approach
In the absence of any potential alternative use, Cornerstone’s approach was to use evidence of freehold sales of arable land (existing use) convert it to an appropriate rental value and then pro-rata it for the Site based on its area. A recognised, and established, method of valuation.
Whilst the Tribunal acknowledged that, for a site with no alternative use, existing use values may be an appropriate starting point,[4] it was not attracted to the ‘low’ value such an approach generated. The Judge said:
“[the parties have to] stand back and look at the product of the valuation…if it seems improbably high or low..” (paragraph 110).
It, therefore, seems that, whilst the Tribunal in the EE Limited and Hutchison 3G UK Limited v London Borough of Islington[5] case (“EE/3 case”) found that there was no floor below which the willing seller wouldn’t go, in this case, that would not have been the case.
Perhaps what the Tribunal is doing is encouraging the parties to make an additional ‘allowance’ for the potential risk and burdens on the landowner arising from the grant of the Code agreement where the existing use value does not perhaps recognise these risks. This is consistent with the EE/3 case where an additional ‘allowance’ was used to supplement the nominal value of £50 leading to the grant of an ‘all-in’ agreement.
Key Points
Jurisdiction – an operator should seek a Code agreement against the occupier, even if that occupier is another operator.
Public Benefit – Cornerstone satisfied the public benefit test.
Terms – given that the case was dismissed, the terms of the Code agreement were not considered.
Consideration: CBE’s Approach:
Tribunal dismissed CBE’s approach of arbitrarily discounting Old Code (by 35%) and new Code agreements.
Evidence of genuine new Code agreements, or a coherent basis for adjustment, could be persuasive.
Cornerstone’s Approach: Tribunal agreed that, where no other potential alternative use can be identified by reference to evidence of similar sites, existing use value may provide an appropriate starting point. Thought CS’s approach led to a figure that was ‘too low’ i.e. the parties wouldn’t agree to such a low figure (Consideration of £26 for a 10 year term)
Compensation – Tribunal dismissed CBE’s compensation claim for loss of rent from Vodafone’s existing occupation.
Final Word on Consideration
There is a lot that both operators and landowners can learn from this case. But what most people involved in telecoms really want to know is…what’s a Code agreement worth?
Pulling the various threads together from both this case and the EE/3 case, it appears that where there is a greenfield site with similar characteristics as this site:
The starting point is existing use value (excluding telecommunications use) where no other potential alternative use can be identified (by reference to evidence of similar sites).
Post new Code agreements of similar rural sites in close proximity concluded on statutory assumptions might be persuasive as comparables.
The existence of a service charge in the EE/3 case gave the Tribunal a helpful mechanism to arrive at an ‘all-in’ occupational lease that gave unrestricted access rights at £1,000 per annum.
Is it conceivable that the Site, in this case, would achieve more than £1,000 per annum? In the absence of evidence to the contrary, it is arguably a lot less.
What’s clear though is that both parties must keep working at this – and that’s what the Tribunal will expect…
At Cornerstone, we are always willing to have a discussion with landowners on the value of sites, and their alternative uses.
Carlos Pierce is Head of Legal Projects, Strategy and the Code programme, and Tina Middleton is a Senior Code Lawyer, at Cornerstone the UK’s leading mobile infrastructure services company set up as a joint venture between Vodafone and Telefónica.
[1] This is consistent with the approach taken by the Tribunal in EE Limited and Hutchison 3G UK Limited v The Mayor and Burgesses of the London Borough of Islington [2019] UKUT 0053 (paragraphs 132 and 133) [2] Paragraph 113 of the judgment [3] paragraph 114 of the judgment [4] Paragraph 107 of the judgment [5] EE Limited and Hutchison 3G UK Limited v The Mayor and Burgesses of the London Borough of Islington [2019] UKUT 0053, per paragraph 96
